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Monday, May 16, 2005

Another A of Airlines ….its Achilles Heel !

Yes, the 5th A of AirlinesTill now, I spoke about the Marketing Strategies and the cost-control measures adopted .But, all is not goodie goodie about this industry. There are certain soft points, weaknesses, and loopholes, that have not been addressed, or are a side-effect of the cost-control measures.Air Deccan, which is part of helicopter charter specialists Deccan Aviation, started it’s operations in 2003, with an initial effort to connect the non-metros over a short-haul period. Once it commanded the southern region, it ventured into the metros, and expanded its fleet from 2 to 15 within a year. It now plans to take it to 36, by the end of fiscal year 05-06.But, somewhere, in this expansion process, certain areas were overlooked:

Being a low cost airline, the employee strength is minimal, and thus, coordination and procedures take their toll.In Speaking at “Synergising ATC-Airports-Airlines to meet ContemporaryChallenges in Civil Aviation” held at New Delhi on November 1 & 2, 2004, Capt. G R Gopinath, MD, Air Deccan, whose topic was “Economics of low cost travel in India”, elaborated the capacity handling constraints of aerodromes, particularly in respect of Delhi and Mumbai. Because a low cost airline banks upon the factor of optimum uses of the aircraft and that can be achieved only if you have a quick turn around time at the Airports.Delay in flights is a major bottleneck for Air Deccan, and has started hampering the brand value of the airlines gradually.I can narrate one personal experience. I had to go from Bhopal to Delhi once on Air Deccan, and the flight was scheduled for departure at 6.40 pm from Bhopal.The flight which was to take me, started the day with Delhi-Bombay, Bombay-Delhi, then Delhi-Jaipur, Jaipur-Delhi, and then Delhi-Bhopal, and Bhopal-Delhi, as far as I remember ( might have missed out a destination maybe).It so happened that the first flight from Delhi got delayed due to fog over the capital, by an hour. And there the story started, with the aircraft facing landing problems at virtually every airport subsequently.Finally, I managed to start from Bhopal at 8 pm, and it was a pretty decent time for the take off, according to the Airport authorities ! The Airport incharge for Air Deccan told me that it was a regular affair for Air Deccan to delay its flights, and would certainly be a part of the W in Air Deccan’s SWOT Analysis.

operators like Air Deccan, which have no back up aircraft, are continuing to break the hearts of summer holiday travellers, many of who are trying to take advantage of its low fares to fly to holiday destinations for the first time. On Friday last, the airline cancelled its flights to Coimbatore and other destinations due to engineering problems.

She also criticizes the airline with few other concerns, rather as they say in business lingo, AoIs:

its call centre was clogged. We were told it was because its three phone lines were being used by the staff to inform passengers about the cancellations. Curiously, the airline which has a modern on-line booking facility, is funded by private equity and hoping to go public, does not have the presence of mind to announce its cancellations through its website. And the ‘‘full refund’’ that it offers passengers is meaningless because a transfer to another airline is probably thrice as expensive. Ms. Mulchandani, a victim of Friday’s cancellation had cautiously purchased a ‘‘back up train booking two days later’’, which will be cancelled if she gets to fly. No-frills flying surely cannot work if it needs a train back up. It is probably a matter of time before consumers start dragging the airline to court to demand proper compensation.

The first flight in September 2003 did slap an embarrassment for Air Deccan, as is covered by Atimes in one of its articles. Since it is quite an old issue, I don’t want to discuss that. But, what one can infer from this is that, it emerged out of this crises in a commendable way, to be one of the most preferred brand, due to its business strategy. An aggressive campaign had been launched that time, else Mr. Gopinath would have had to pack his bags. Now, with its massive expansion plans, I guess, a similar effort needs to be taken to instill trust in its customers, to retain the loyalty they have earned over the past 2 years.

Few other areas which need attention:(a) Attrition: The fierce competition among airlines has affected the operations of Air Deccan too. Several airhostesses of the airline had left for jobs with foreign airlines while 15 co-pilots have joined Indian Airlines. The airline currently has 200 pilots, 100 engineers and 150 airhostesses. According to estimates, the airline would require 700 more pilots once the fleet acquisition is completed.(b) Airport Infrastructure: The findings of the Naresh Chandra Committee report, A Roadmap for the Civil Aviation Sector paints a dismal picture of airport infrastructure. In all, there are 122 airports which are managed by the Airport Authority of India (AAI). Of these 94 are civil airports (including 11 international) and 28 are civil enclaves at defence airfields. Out of the 400-odd airstrips and airfields in the country, only 62 are in use. Dispersal of traffic simply hasn't happened, with over 40 per cent of traffic being between Mumbai and Delhi. The four gateway airports account for 42 per cent of revenue. Only 10 airports made a profit in 2001.There is a large number of airports where full infrastructure is available, but only operate one to two flights a day.

(c) Competition:Kingfisher started its operations with value-added services at low tariffs.Though the segment targeted is different, and the routes do not clash for time being, it sure promises competition in future.Others aiming for the skies are - Spice Air, Go Air, Indigo, Indus one, Air One, Yamuna Airways, Arab Express, Jagson Airlines, Air Arabia, Air Asia and Tiger Airways ( Taken from Domain-b, Business World and Business Week )

(d) CRM – They do not have any customer loyalty programs, and the customer databased is not being utilized to it potential. An established CRM would definitely be an add-on.

(e) Supply Chain : This is going to be the most important parameter for the low cost airlines in the coming future. The processes at the airport, the coordination system between the various centres, 24by7 support at the call centres with better infrastructure, minute-by-minute information flow and updates, and the passenger loyalty programs – as the airline grows, these issues also need to be addressed, to ensure a streamlined airline, with its objectives clear, and armaments in place, ready to take up the road ahead .. rather ..the sky ahead !

Before Air Deccan becomes an overkill, will wrap it up for the time being. But, surely, this industry seems to be a very promising one, and the more one studies about it – the Indian interface, the more one realizes that there is scope for more… much more….Come one, come all … fix the price, and ..let the consumers have a Ball !With its inviting gestures, it does beckon, this naughty little plump fellow, Mr. Air Deccan !But don’t worry, we have a lot of space in the sky, so come quickly .... and grab your share of the pieTill then, enjoy the beauty of the stars and the moon, cause the way I see it, they are gonna be out of our sight pretty soon !